What the Chettiar era tells us about fintech

Singapore is a financial centre with gleaming towers full of banks. The world’s leading banks adorn the skyline. The bankers are cosmopolitan and hail from Greenland to New Zealand.

But, up to the early 1960s, Singapore’s banking was dominated by a South Indian community called the Chettiars. The Chettiars are a caste of merchants who enjoyed the exclusive status as financial intermediaries in many parts of the British empire, such as Burma, Ceylon and British Malaya (which then included Singapore). They acted for the big British banks such as Standard Chartered and The Hong Kong and Shanghai Bank (now HSBC).

In Singapore, the big British banks lent to the Chettiars, who would in turn lend to local borrowers. The Chettiars were liable for the loans and collected an interest spread in return. As agents of the banks, the Chettiars had to understand the financial standing of their borrowers. On the other hand, the banks were able to maintain a lean staff. In modern financial parlance, the Chettiars were loan underwriters for the banks and disintermediated their risk.

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